Senate Bill Would End PPO’s

A new bill introduced in the US Senate, if passed, will lead to extinction of PPO’s in this country. If consumers and plan sponsors are able to access the Medicare network at Medicare pricing, (Renting Medicare’s Provider Network) why would anyone stay with a PPO with pricing averaging two, three, or more times than Medicare pricing? Would you?

Purveyors of Reference Based Pricing strategies will rejoice because instead of paying 120% to 150% of Medicare now, they will swiftly reduce the benchmark to, at a minimum, 100% of Medicare allowable. And, I expect, some plan sponsors will tag their reimbursement to 80% of Medicare allowable as a cost sharing measure with plan members……………Bill Rusteberg

Senate Bill Proposes Medicare Health Plan for All Ages…………A new bill introduced in the US Senate aims to create a Medicare health plan without age requirements and open Medicare access to the employer-sponsored market.

April 23, 2018 – Senator Jeff Merkley (D-OR), with sponsorship from 11 other Democrats, has introduced a bill to create a Medicare health plan for all ages that would be offered in state and federal health exchanges, as well as the employer-sponsored market.

The Choose Medicare Act proposes to use initial funding of $2 billion to offer “Medicare E” plans to any consumer. Medicare E plans would provide similar medical coverage, prescription drug benefits, and provider networks as Medicare A and B plans, according to the bill’s text.

Merkley asserted that implementing Medicare E for plan year 2019 may lower consumer costs and achieve federal savings. He added that Medicare E can likely leverage Medicare’s extensive network of providers and its ability to negotiate fair prices for provider services and prescription drugs.

“Every American deserves the promise of access to a popular, affordable, high-quality health care option,” Merkley said. “Fortunately, we already have exactly such an option – and it’s called Medicare. The Choose Medicare Act creates a Medicare option for all, putting consumers and businesses in the driver’s seat on the pathway to universal health care.”

Lawmakers wrote the bill to create significant changes in beneficiary cost that would lead to more affordable consumer costs.

The bill establishes an out-of-pocket maximum of $6700 for the year 2020. The Medicare program will use percentage change in the medical care component of the Consumer Price Index to set initial Part E out-of-pocket limits.

Premiums for Medicare E plans are based on factors already used to set private health rates. These factors include individual and group rates, costs based on a geographic region, and administrative costs to operate the plan.

Member deductibles, co pays, and other coinsurance costs in Part E would be the same as Part A and Part B, the bill states.

The Choose Medicare Act would add reductions for copay and cost sharing totals for individuals who earn incomes between 100 and 133 percent of the federal poverty level. Members with higher incomes would pay higher cost sharing and the highest earners would expect health plans to cover 80 percent of cost sharing totals.

Medical benefits for private and employer-sponsored Medicare members would be extended under the new law as Medicare E beneficiaries would receive gold-tier medical benefits and traditional essential health benefits defined under the ACA.

Lawmakers sponsoring the bill asserted that adding a private and employer-sponsored Medicare option will likely lead to a greater variety of health plan competition and choice for consumers.

The Choose Medicare Act also adds a provision called a “Navigator Referral” to ensure that employers can explore a potential option to provide Medicare E group plans to their employees. The bill would require both navigators and employers to offer Medicare E plans alongside other private health plan options.

The bill establishes a reinsurance fund in each state to stabilize health plan premiums for the new Medicare E plans. Lawmakers proposed a startup allocation of $10 billion to establish and maintain reinsurance programs in each state’s individual health plan market.

The Choose Medicare Act contains a provision that may encourage the use of alternative payment models (APMs). The bill states that the Medicare program would implement APMs for Medicare E provider reimbursement if an APM could increase healthcare quality and lower consumer costs.

The proposed bill may generate heated debate among congressional lawmakers since healthcare reform remains a polarizing topic in Congress. The bill’s sponsors argue that the Medicare program is an effective tool to increase competition and lower healthcare costs nationally.

“Every American deserves access to quality, affordable health insurance – that should be a fundamental right,” Senator Corey Booker (D-NJ) said. “Our bill will provide more health insurance options for Americans by expanding Medicare to more people while also improving the program for existing enrollees.”

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